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Nate Dogg RIP: What Ben Bernanke Can Learn

By

Matt Phillips

Mar 16, 2011 12:24 pm ET

Nate Dogg: Regulatin’

A tip of the MarketBeat cap to Nathaniel Dwayne Hale, A.K.A. Nate Dogg. The smooth-as-hell West Coast R&B singer has died too young at the age 41. Closely affiliated with West Coast hip-hop legends Snoop Dogg and Dr. Dre, Hale’s silky vocals had the unique ability to sound simultaneously melodious and physically menacing. He was best known for teaming up with Dr. Dre’s stepbrother, Warren G on the 1994 megahit “Regulate.”

Now, strictly speaking, “Regulate” is not a meditation on macroprudential financial policy. Nope. it’s a rather conventional gangsta rap odyssey involving a dice game, an attempted robbery, discharge of firearms and a gaggle of overly friendly women experiencing car trouble.

But listening to “Regulate” closely here at MarketBeat today, we can’t help but hear the hit with new ears in light of the financial crisis the nation suffered in recent years. And we think, in light of Hale’s passing, it’s high time that key financial regulators sit down and listen hard to what they might be able to learn from Nate Dogg. Especially Fed Chairman Ben Bernanke.

Greenspan: Not regulatin’

There’s a lot of blame that goes around for the financial crisis. But for our money, Bernanke’s predecessor Alan Greenspan deserves plenty for the low rates and hands off regulatory policy that prevailed during the final years of his reign as Fed chief. Make no mistake, like Nate Dogg and Warren G — Elizabeth Warren G? — the Fed is one of the primary banking regulators in the U.S. In the run-up to the crisis, the Federal Reserve regulated bank-holding companies and, along with the FDIC and state regulators, state-chartered banks. Or at least it should have.

The problem is, Mr. Greenspan was a free market ideologue who didn’t believe in regulation. The Journal has reported that back in 2005, 25% of subprime mortgages were made by lenders affiliated with a regulated, deposit-taking bank or thrift, including affiliates of bank-holding companies supervised by the Federal Reserve. The Fed also had authority to write consumer-protection rules on things such as credit-card disclosures and the terms of high-cost mortgages. Its failure to do so helped puff up the subprime bubble.

In short, Bernanke should be less Ayn Rand and more Nate Dogg when it comes to regulating. And let Nate Dogg’s words be his guide.